I just finished co-producing and hosting a Mountainfilm on Tour stop in Atlanta last weekend. It was a great event that spanned two nights of film screening for adults and a kids’ matinee called Kidz Kino. It offered us an opportunity to introduce Morgan Stanley’s Investing with Impact platform to attendees. The response has been overwhelming and we are looking forward to packing the Plaza Theater next year.
One of our sponsors was Interface, Inc., a leading carpet tile manufacture and change agent in modular carpet tile industry. At the same time I was preparing for MountainfilmATL, I was cleaning out some files in my office and came across a letter that I had written to my clients in 2002 quoting Ray C. Anderson the founder and CEO of Interface, Inc.
Power of one and the ascendancy of women
In the letter, I talked about Ray’s discussion of the power of one; the power one person has to foster change. This change, he said, will not happen overnight. The momentum can build from one person who feels strongly enough about an issue. He talked about “business spirituality.” Business spirituality is the discovery of the value in business.
Ray goes on to say the following: “The growing field of spirituality in business is a cornerstone of the next industrial revolution, as I see it. I believe, too, that the ascendancy of women in business in coming just in the nick of time. It is that instinctive nurturing nature, found more frequently in women, but also present in men if they will allow it to surface, that will recognize and elevate in business the vital, indispensable role of genuine caring. Caring for human capital and natural capital (Earth) as much as we traditionally have cared for financial capital will give social equity and environmental stewardship their rightful places alongside economic progress and society to reinvent the means for achieving economic progress itself”.
Earlier this week I was reading an article written by Joseph Keefe, President and CEO of Pax World Management, LLC. He started off by talking about the “gender gap” in politics and that there has been almost a 10% voting spread between Democratic and Republican candidate with women favoring the democratic candidates since Bill Clinton and Bob Dole. On public policy issues, women are more likely than men to favor an activist role for government in guaranteeing health care and basic social services. Essentially, women’s political views in recent decades have trended more to moderate-to-liberal while men have trended moderate-to-conservative.
The gender divide and investing
Not surprisingly, these attitudinal differences between the sexes play out when it comes to money and investing as well. Women are more inclined than men to want their investments aligned with certain social and environmental values. A recent U.S. Trust survey of high net worth investors asked how important social, political or environmental impacts were in evaluating investments. Such impacts were considered “somewhat” or “extremely” important buy 65% of women but only 42% of men.
This gender divide among investors appears to play out among investment advisors as well. Female advisors report to be more interested than their male counterparts in using sustainable investing funds or strategies – that is, those that integrate environmental, social and governance (ESG) factors into the investment process – by a margin of 59% to 34 %.
Something is happening here. Women it seems are more inclined to want their investments aligned with their values while men are more likely to compartmentalize – investments in one compartment, moral and political values in another. Whereas men tend to view money as ethically neutral, women generally have stronger feelings about the social and environmental impacts of money.
This gender gap in investment attitudes is taking place at a historic juncture; women are becoming a major economic force worldwide. 45% of American Millionaires are women and by 2030 it is projected that roughly two-thirds of the nation’s wealth will be in women’s hands. Women are the breadwinners or co-breadwinners in two-thirds of American households. They own more than 40% of all U.S. businesses. Of estates worth more than $5 million, women currently control more than 48%. And on a global basis, they stand to inherit 70% of the $41 trillion in inter-generational wealth transfer expected over the next 40 years. As Newsweek magazine put it, “women are the biggest emerging market in the history of the planet.”
Companies with better practices are better positioned for the long term
Sustainable investing – integrating ESG factors into the investment process – is a rapidly growing part of the investment landscape. It accounts for about $3.3 trillion in assets under professional management in the U.S. or approximately 11% of investment dollars. A lot of people, not just women, want their investments to have a positive impact on the world their children will inherit and are therefore opting to align their investments more closely with their values. Not incidentally, they are also concluding that companies with better environmental, social and governance practices are perhaps better positioned for long term financial success as well.
Women are leading the way. This is an historic time, in the financial services industry – actually, both an opportunity and an obligation. If financial advisors are going to serve this growing market, then they will need to consider offering socially and environmentally sustainable investment options as a core component of their practice. It’s as simple as that. Their clients – who increasingly will be women – are going to insist on it.
I am sorry that Ray Anderson is not around to see the historic changes taking place that he foreshadowed almost 15 years ago but I am sure he is smiling.